Plan Ahead and Prepare: Financial Success During Economic Uncertainty

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Adapted from my letter sent to my private wealth management clients on November 3, 2021.

For the past few decades, I’ve heard people bemoan the annual “Christmas creep” as wreaths were hung, trees were decorated, and Bing Crosby albums were heard throughout the stores earlier and earlier each year. Well, it seems the supply chain problems may prevent Santa from getting his goodies from cargo ship to sleigh this year. So, if you were one of those people wishing the Christmas creep would stop imposing on your Thanksgiving—or even Halloween—celebration, this is the year that you may want to jump on that early Christmas wagon!

While the supply chain breakdown and labor shortages may combine to further disrupt the easy, “purchase with a click,” speedy delivery consumer experience we’re accustomed to, they may also add to the inflation and higher prices for which we’ve been planning.

We spoke about planning for inflation and rising interest rates in our September client-only webinar with Ken Chambers, a fixed income strategiest, from Pimco investments. Bond investments are in a tough spot, and with their current low interest rates, many people are wondering why own bonds at all?

While Chambers shared the strategies Pimco is using to manage interest rate risk in their bond funds, we choose to allocate to bonds in client portfolios with a primary goal of protecting near-term spending power during stock market drops. A secondary reason for owning some bonds—even in younger investors’ portfolios—is to have an expected stockpile of dollars (in the form of bonds) that can be used to buy stocks at bargain prices during the eventual stock selloffs.

Save the Date

On November 19, we’ll be hosting another client-only discussion with Dimensional Fund Advisors. We will be discussing long-term drivers of investment returns, “evidence-based investing,” and techniques to potentially improve upon market capitalization-based index investing. We’d love to have you join us!

Tax Law Changes

We are currently waiting for new tax law changes to drop at any moment. In advance of this bill, we have been looking, on a case-by-case basis, at tax planning steps, such as Roth IRA conversions, recognizing capital gains (and losses), and advanced gifting strategies. As soon as the ink is dry on any new tax laws, we will be reviewing to think through which steps, if any, clients should consider before the end of the 2021 calendar year.

ICYMI

In case you missed it, here are some more of my detailed thoughts on market and planning topics we’ve recently shared:

We appreciate the opportunity to serve you, and we wish you and your families the best during the upcoming holiday season. As always, please feel free to reach out with any thoughts or questions.

Thank you,

Scott